A closely watched survey has revealed “subdued” business activity in December, and there are fears that the ‘Brexit brakes’ have brought economic growth in the UK to a standstill.
With a rating of 51.2 on the IHS Markit’s Purchasing Managers’ Index (PMI) in December, results showed that the UK’s services sector recovered slightly from November’s reading of 50.4, which reached a 28-month low. However, this was not enough to allay fears.
The services sector, which accounts for more than 75 per cent of the UK economy, saw business activity rise at its slowest rate for two-and-a-half years in December, while job creation also ground to a near halt as Brexit uncertainty weighed on firms.
December’s reading was the second-slowest rate of business activity growth and services employment since July 2016, after the UK voted to leave the European Union.
The survey suggests that, towards the end of last year, concerns over the UK’s departure from the EU affected businesses’ spending plans, while consumer demand was more subdued, which hit sales.
The data also indicated that businesses which won new work grew slightly from November although employment growth in the services sector was softer in December as firms aimed to cut costs. In addition, tight labour conditions made it difficult to recruit skilled staff.
A spokesman for IHS Markit said that the services sector is showing “worrying signs” of having lost steam amid intensifying Brexit anxiety, as the final two months of 2018 saw the weakest back-to-back expansions of business activity since late-2012.